AfDB, largest financier of clean energy on the African continent with $4.3 billion in energy projects

Between 2011 and 2012, the African Development Bank (AfDB) increased by a staggering 92% its investment in clean energy in Africa, according to a new report by Bloomberg New Energy Finance. The publication looks at the clean energy transactions of 26 national and multilateral development banks from 2007 to 2012.

The AfDB now ranks 11th of out 25 on a list of development investors that is topped by Germany’s Kfw Entwicklungsbank, China Development Bank and the Brazilian Development Bank. The AfDB’s investments had increased slowly but steadily from 2007 until last year, when they expanded exponentially. Total AfDB investment in 2011 was only $769 million, as compared to $1.475 billion in 2012. In total, the AfDB has dedicated $4.3 billion to clean energy since 2007.

Kurt Lonsway, Acting Director of the African Development Bank’s Climate Change Department, expressed pride that, “in a few short years, the AfDB has become a major player in the global effort to develop clean energy. The need is particularly real in this region. Africa as a continent is in a distant fourth place behind Europe, Asia and Central and South America in terms of the total amount of clean energy investment. Thus it is crucial that the AfDB stay active in this area to keep the continent moving towards an environmentally sustainable future.”

As documented in the report, the African Development Bank has been, by far, the largest source of financing for the Africa region providing $4.3 billion of the total $14.7 billion invested by development banks in the region for clean energy projects since 2007. The World Bank Group was in second place with $2.9 billion.

In 2012, clean energy financing from development banks broke the $100 billion mark for the first time in history. The African Development Bank has been keeping pace with this investment trend, specifically, but also in general in terms of its work on the environment. In May 2010, the AfDB created its Energy, Environment and Climate Change Department to bring these three interlinked disciplines under one operational unit to deliver tangible results for the Bank’s regional member countries. In particular, the Department manages climate finance instruments for the Climate Investment Funds (CIF), the Global Environment Facility (GEF) and the Sustainable Energy Fund for Africa (SEFA). The significant additional resources brought by these funds totaling $1.2 billion since 2010 allows the Bank to support innovative operations such as the Moroccan Integrated Solar and Wind Energy Programs or the Geothermal Development Project in Kenya which would otherwise be too costly and risky to materialize in the short term. In addition to financing, the Bank provides technical support for accelerating green growth. Indeed, the African Development Bank’s 2013-2022 strategy has as its twin objectives inclusive and increasingly green growth.

In general, clean energy has enjoyed a big boost from development banks in recent years.